Key Disclaimers
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This is not a price projection:
The price might not necessarily reach our defined buy zone. This plan outlines a structured approach for buy-and-hold investors if the price does get there. -
Trade at your own risk:
This plan provides a framework and should not be taken as investment advice.
AMD Stock Buy Levels – With an Example Budget. Maintain the Budget Proportions as Stated.
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First Buy Zone:
- Price: $111.08
- Position Size: 20 shares (16.67% of the budget)
- Cost: $2,222
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Second Buy Zone:
- Price: $106.87
- Position Size: 40 shares (33.33% of the budget)
- Cost: $4,191
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Third Buy Zone:
- Price: $101.38
- Position Size: 60 shares (50% of the budget)
- Cost: $6,083
AMD stock – a ‘buy the dip’ opinion
Weighted Average Entry Price (WAP)
If all buy orders are filled:
WAP=(111.08×20)+(106.87×40)+(101.38×60)120\text{WAP} = \frac{(111.08 \times 20) + (106.87 \times 40) + (101.38 \times 60)}{120}
WAP=120(111.08×20)+(106.87×40)+(101.38×60)
WAP=104.13\text{WAP} = 104.13
WAP=104.13
Stop-Loss
- Stop-Loss Level: $95.80
(8% below the weighted average entry price)
Risk Per Share
104.13−95.80=8.33104.13 – 95.80 = 8.33
104.13−95.80=8.33
Total Risk for Full Position
If all 120 shares are purchased:
8.33×120=999.628.33 \times 120 = 999.62
8.33×120=999.62
Take-Profit Levels
To achieve a strong reward-to-risk ratio (e.g., 6.25:1), we set the profit target at 50% above the weighted average entry price:
- Take-Profit Target: $156.19
Reward Per Share
156.19−104.13=52.06156.19 – 104.13 = 52.06
156.19−104.13=52.06
Total Reward for Full Position
52.06×120=6,247.2252.06 \times 120 = 6,247.22
52.06×120=6,247.22
Performance Metrics
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Risk-to-Reward Ratio:
Total RewardTotal Risk=6,247.22999.62=6.25:1\frac{\text{Total Reward}}{\text{Total Risk}} = \frac{6,247.22}{999.62} = 6.25:1Total RiskTotal Reward=999.626,247.22=6.25:1
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Full Position Size: $12,495.
Scenario Analysis
1. If All 3 Buy Orders Are Filled:
- Average Entry Price: $104.13
- Stop-Loss Level: $95.80
- Profit Target: $156.19
- Reward-to-Risk Ratio: 6.25:1
2. If Only 2 Buy Orders Are Filled:
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Adjusted WAP (First and Second Buys Only):
WAP=(111.08×20)+(106.87×40)60=108.27\text{WAP} = \frac{(111.08 \times 20) + (106.87 \times 40)}{60} = 108.27WAP=60(111.08×20)+(106.87×40)=108.27
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Stop-Loss Level: $99.61
(8% below the new WAP) -
Profit Target: $162.41
(50% above the new WAP)
Why you should care about this possible ‘Buy the Dip’ at AMD stock
This plan is based on an analysis of institutional volume profiles and VWAPs, where shorts are expected to cover their positions and new longs, including possible institutional buyers, may step in to protect against further declines in the stock price, alongside fresh long positions entering the market.
Volume Profile displays the distribution of traded volume across different price levels, helping institutional buyers identify key areas of support and resistance where significant market activity occurs. These tools are crucial for institutions as they guide decisions to optimize entries and exits, minimize slippage, and detect where large players are likely to step in.
This trade plan is structured for long-term buy-and-hold investors who are looking for a layered entry approach into AMD. It aims to capture a strong risk-to-reward ratio of at least 6:1, while maintaining strict risk management via a clearly defined stop-loss.
Let me know if you’d like any further adjustments or additional details!